Shipbuilding blueprint unveiled

China will encourage more foreign investment in its shipbuilding industry but will restrict it to 49%, according to the latest official blueprint for the industry. “Foreign shipbuilders are allowed to reorganize, acquire or jointly fund shipbuilding enterprises provided they hold no more than 49% of the shares,” according to the ?National Medium and Long-term Plan for the Shipbuilding Industry?.

The same rules apply to medium and low-speed marine diesel engine production and crankshaft manufacturing companies. Sino-foreign joint ventures must set up a technical centre to absorb technologies transferred by foreign investors, the plan said.

It was published by the State Commission of Science, Technology and Industry for National Defence, which administers shipbuilding affairs in China, and the National Development and Reform Commission, China’s top industrial planning body.

As for manufacturing advanced products needed for ships, China will encourage foreign investors and public investment, it said. “Last year foreign investment in China’s shipbuilding sector reached $220 million, an increase of 45% on 2004,” said Nie Lijuan of the China Association of the National Shipbuilding Industry. “Although the figure was comparatively small,” she said, “foreign companies have sped up construction of some shipbuilding plants and some component manufacturing facilities.”

China has become the world’s third-largest shipbuilder in terms of output, following Japan and South Korea. In 2005 China’s shipbuilding output was over 12 million DWT, approximately 17% of the global market.

Also underlined in the plan were product development and technological improvement. Under the plan, annual output will hit 17 million DWT by 2010. The plan also said that more than 60% of ship equipment will be produced locally by 2010. To realize these objectives, China will speed up construction of three key shipbuilding bases in the Bohai Rim, the Yangtze River Delta and the Pearl River Delta.

“This year the shipbuilding industry has continued to grow rapidly, with new orders hitting 16.08 million DWT in the first half of the year, an increase of 113% over the same period last year,” said Nie. “More than 70% of these new orders are for exports, with State-owned shipbuilders accounting for over 70% of exports,” she said.